The Organizational Structure & Spatial Dynamics of Investment Advisory Services: The Case of Metropolitan Philadelphia, 1983-2003

Department of Geography and Geosciences Bloomsburg University Bloomsburg, PA 17815

John E. Bodenman

ABSTRACT This article examines the organizational structure and spatial dynamics of the institutional investment advisory industry, 1983-2003, focusing on the Philadelphia Metropolitan Area. Traditionally, high order financial services located in Pennsylvania like institutional investment advisory services have been concentrated in the Philadelphia Central Business District (CBD). However, analysis of the industry's organizational structure and spatial dynamics over the 19832003 study period indicates significant growth of the industry within the Philadelphia Metropolitan Area, but relative decline within the traditional core--the Philadelphia CBD. The Money Management Directory of Pension Funds and their Investment Advisors (1983-2003) provides the data for the analyses. Maps and tables describe the institutional investment advisory industry's spatial organization at both the inter- and intrametropolitan scales. Key words: investment advisory services, financial services, location

INTRODUCTION
The tremendous growth of the multitrillion dollar institutional investment advisory industry 1 over the 1983-2003 study period, is emblematic of the nation's transition to an "information economy" (Hepworth 1990; 1991). With over $18 trillion in total assets under management in 2003, the location of institutional investment advisory firms represent financial "control points" in the nation's economic geography (Borchert 1978; Green 1993; Graves 1998; Bodenman 2000). Furthermore, information-intensive financial services providers like institutional investment advisory firms have traditionally anchored downtowns (Stanback 1991; Carlino 2001), and thus their locational dynamics should be of particular interest

to all concerned with the vitality of urban centers in the United States. The great majority of research exploring the locational dynamics of financial services activities suggests that information intensive financial services are disproportionately concentrated in the cores of the largest metropolitan areas due to (1) the importance of trusted faceto-face contacts in the decision making process at the highest level, (2) the existence of a business/social milieu, (3) prestige of a given place, (4) the importance of fixed assets in the Central Business District (CBD) that could be devalued in the case of owner exodus, and (5) agglomeration of ancillary services, including networks, telecommunications, and "knowledge spillovers" (Carlino 2001; Clark 2000; Daniels 1993; Sassen 1991; Castells 1989). More specifically, there is general agreement that spatial concentration in high order urban centers promote: (1) opportunities for backward

1 The investment advisory industry consists of investment

advisory firms that manage the securities portfolios of institutional clients for a fee.

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linkages (i.e., database services, business and financial information services, computer and other technical services); and (2) opportunities for forward linkages (i.e., markets). Theoretically, concentration allows firms to maximize opportunities for both forward and backward linkages, and minimize the transaction costs associated with the production and delivery of financial services (Bloomfield et al. 2000; Lee 2000; Daniels 1993). This article will highlight the organizational structure and locational dynamics of the investment advisory industry in Pennsylvania, 1983-2003, focusing on Metropolitan Philadelphia. First, I will provide a general background of the institutional investment advisory industry in Pennsylvania. Second, I will provide an overview of the Money Market Directory data sets used for the tables, maps, and figures compiled for analysis. Finally, I will conclude with several suggestions for the direction of future research on this topic. BACKGROUND Until the 1970s, the vast majority of investment managers and their traders worked for banks and insurance companies. Independent investment advisory firms of any size first appeared in the early 1960s and proliferated in the 1970s and 1980s, when clients began demanding more aggressive investment strategies. Figure 1 illustrates that, in 1983, independent investment advisory firms (also referred to as investment management firms) managed 30% of the total assets under management, while banks and trusts ran 34%, and insurance companies 35%. By 2003, independent investment advisory firms had increased their share of managed assets to more than 86% of the $21.3 trillion in total assets under management, with banks and trusts dropping to 4% and insurance

companies to 8%. Though pension funds (tax-exempt assets) are by far the largest source of managed funds, investment advisory firms also take in billions of dollars from profit-sharing plans, employee savings plans, unions, state and local governments, endowments, and foundations. The primary investment vehicles are transferable securities and equity products that include stocks, bonds, commercial paper and derivative products like futures, options and swaps. Table 1a lists the top twenty investment advisory firms in the United States ranked by total tax-exempt assets under management in 2003. Table 1b lists the top twenty investment advisory firms located in the state of Pennsylvania. Note that the largest firm in Pennsylvania, The Vanguard Group (Table 1b), is the fourth largest advisory firm in the United States (Table 1a). The purpose of this article is to examine the locational dynamics of the investment advisory industry in the state of Pennsylvania. The institutional investment management business--the management of pension and endowment assets for a fee--is an excellent example of an important information intensive financial services industry that has grown dramatically over the 1983-2003 study period. Geographical analysis of the institutional investment advisory industry at both the inter- and intrametropolitan scales will provide a basis for examining the extent to which concentration, dispersal and/or both processes are operating with respect to the industry's locational pattern within Pennsylvania as the information economy continues to mature. DATA AND ANALYSIS The data to map investment management firm locations and assets under management were obtained from Standard & Poors: The Money Market

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Directory of Pension Funds and Their Investment Managers (1983; 2003). Based on both SEC licensing information and individual firm surveys, the directory provides a profile of every institutional investment management firm managing assets for a tax-exempt fund sponsor headquartered in the United States with over $1 million in total assets. The assets under management include corporate, state and local government, and union plan sponsored employee benefit funds (all tax-exempt), as well as endowment and foundation funds (also tax-exempt). Institutional investment advisory firms produce a constantly evolving and varied mix of products and services that are sold to institutional investors, clients with a minimum of $1 million tax-exempt assets invested. Defining and measuring the aggregate value of the output produced by the industry is problematic. However, given that investment advisory firm revenues (fees) are based on a percentage of the assets they have under management, total assets under management serves as a surrogate measure of the industry's output, and relative asset size provides an indicator of the market shares held by individual firms, as well as the changes in shares over time. INTERMETROPOLITAN DISTRIBUTION Table 3a indicates that in this initial year, the top ranked MSAs by percent of total assets and percent of total firms included New York, Boston, Chicago, San Francisco, and Los Angeles. The highest ranked MSA in the state of Pennsylvania was Philadelphia, ranked 8 th behind Houston and Baltimore with 2.9% of total assets, and ranked 6th behind Los Angeles with 3.8 % of total firms. Overall, the 20 highest-ranking MSAs accounted for 94.4% of the assets under management,

and 76.3% of the total firms with assets under management in 1983. By 2003, total tax-exempt assets under management had grown to $7.9 trillion, and the number of investment advisory firms to 897 (Table 2b). Figures 1b and 2b illustrate the tremendous growth of assets under management in the traditional core (New York, Boston, Chicago, Los Angeles and San Francisco), but also in an increasing number of newly emerging centers. By 2003, Philadelphia is ranked 5 ahead of Chicago with 5.4% of total assets, and 2.8% of total firms. Overall, the total assets under management in the top 20 MSAs increased to nearly $7.2 trillion, but the top 20 MSAs share of the total decreased from 94.4% (Table 3a and Figure 1a) to 91.8% percent (Table 3b and Figure 2a). Similarly, the top 20 MSAs share of total firms decreased from 76.3% in 1983 (Table 3a and Figure 2a) to 67.4% in 2003 (Table 3b and Figure 2b). In short, industry deconcentration at the intermetropolitan scale, albeit in a relatively small number of newly emerging centers. Geographically, the 532 institutional investment advisory firms with over $411 billion in assets under management in 19832 were located in 133 cities in 30 states across the nation (Table 2a). By 2003, the total number of firms managing tax-exempt assets had grown to 897 firms with nearly $7,937 trillion in assets under management located in 287 cities in 46 states (Table 2b). By 2003, the state of Pennsylvania ranked fourth overall, with nearly $525 billion under management by 51 firms (Table 2b). Figures 1a and 2a illustrate the spatial distribution of assets under management and number of investment advisory firms by

2 All 1983 assets are reported in constant 2003 dollars.

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metropolitan area in 1983--a total of $411 billion under management by 532 firms. But what about the investment advisory industry's ties to the central business district (CBD)? Are these weakening as well? Are the deconcentration trends at the intermetropolitan level also occurring at the intrametropolitan level? Tables 4a and 4b indicate that the top 20 ranked Cities (the urban cores of MSAs) share of total assets and total firms declined from 90.2% and 65.2% respectively in 1983 (Table 4a), to 88.3% and 39.7% respectively in 2003 (Table 4b). Certainly of note is New York Citys drop from 1st to 2nd behind Boston in the wake of September11, 2001. However, also of note is the emergence of new centers such as Malvern (6), Plainsboro (7), Pasadena (13), Cambridge (18), Purchase (19), and Westport (20). Overall, the emergence of new centers, and the decreasing relative shares of the traditional investment advisory urban cores 1983-2003, suggests that deconcentration is also taking place at the intrametropolitan level. INTRAMETROPOLITAN DISTRIBUTION As discussed earlier, the investment advisory firms with tax-exempt assets under management in 1983 were located in 133 cites in 30 states across the nation (Table 2a). By 2003, the number of cities and towns with firms managing taxexempt assets had grown to 287 in 46 states (Table 2b). Where is investment advisory industry growth occurring? In the traditional financial centers of each respective state? Or in new locations outside of the traditional financial centers? Focusing on Pennsylvania, Table 2b indicates that the state ranks 4th behind New York, California, and Massachusetts, and is home to 51 investment advisory firms with nearly

$525 billion in tax-exempt assets under management. Furthermore, the Philadelphia MSA (ranked 5th ahead of Chicago) and the Pittsburgh MSA (ranked 11th ) had a combined $520 billion in tax-exempt assets under management between them in 2003, or over 98 percent of the total assets under management in the state of Pennsylvania (Table 3b). However, data at the intrametropolitan scale (Tables 4a and 4b) indicate significant relative decline for the city of Philadelphia relative to the suburbs. Table 4a indicates that in 1983 the city of Philadelphia ranked 9th overall in assets under management, and 6th overall in total firms. By 2003, however, Table 4b indicates that the city of Philadelphia falls out of the top 20 with $32 billion under management. The Philadelphia suburb of Malvern, however, appears in the top 20, ranked 6th overall in total assets with $291 billion, more than the city of Pittsburgh ($119 billion) and Philadelphia ($32 billion) combined. In Figure 3a, Philadelphia stands out as the investment management center of Pennsylvania, the location to firms with $8.9 billion in tax-exempt assets under management in 1983, representing 65.7 percent of the total tax-exempt assets under management in Pennsylvania (Table 5). By 2003 (Figure 3b), the southeast corner of the state still appears to be the center of the industry, but Philadelphia is no longer the top city in terms of total assets under management. Table 5 indicates that Malvern, home of The Vanguard Group, is ranked first in 2003 with over $291 billion in total assets, followed by Pittsburgh (2nd) with nearly $120 billion, almost four times the assets under management in the city of Philadelphia (4th ) with $32 billion. Also ahead of Philadelphia is the suburb of

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Figure 1: Percent of Total Assets Under Management by Type of Investment Manager, 1983 and 2003.
100 90 80 70 60 50 40 30 20 10 0 Investment Advisors Banks and Trusts Insurance Companies Real Estate Advisors

Type of Investment Manager

Percent of Total Assets, 1983 Percent of Total Assets, 2003

Source: Money Market Directory, 1983; 2003.

Table 1a:
Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Top 20 Investment Advisory Firms in United States Ranked by Total Tax-Exempt Assets Under Management, 2003
City San Francisco Boston Boston Malvern Plainsboro Los Angeles Newport Beach New York Chicago New York New York Atlanta New York New York Columbus Boston New York Boston New York Pasadena

Firm Name Barclays Global Investors State Street Global Advisors Fidelity Management & Research Co. The Vanguard Group Merrill Lynch Investment Managers Capital Research Mangement Co. Pacific Investment Management Co. J.P. Morgan Fleming Asset Management UBS Global Asset Management Alliance Bernstein Inst. Investment Management Deutsche Asset Management INVESCO Morgan Stanley Investment Management Goldman, Sachs & Co., Asset Management Banc One Investment Advisors Co. Evergreen Investments General Motors Investment Management CDC IXIS Asset Management North America BlackRock, Inc. Western Asset Management

$ Millions CA 696,276 MA 613,840 MA 339,500 PA 290,494 NJ 254,054 CA 247,382 CA NY IL NY NY GA NY NY OH MA NY MA NY CA 229,317 212,562 194,345 193,048 148,548 140,233 133,618 122,723 112,863 111,447 107,400 93,000 87,511 87,502

Source: Money Management Directory, 2003.

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Rank
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Top 20 Investment Advisory Firms in Pennsylvania Ranked by Total Tax-Exempt Assets Under Management, 2003
Firm Name City
Malvern Pittsburgh Conshohocken Pittsburgh Pittsburgh Philadelphia Radnor Philadelphia Philadelphia Berwyn Berwyn Chadds Ford Pittsburgh Radnor King of Prussia Wyomissing Valley Forge Pittsburgh Wayne Philadelphia

$ Millions
290,494 62,250 39,758 32,367 18,425 18,036 9,019 6,311 5,862 4,674 4,492 3,382 3,127 2,971 2,877 1,937 1,850 1,791 1,581 1,329

The Vanguard Group Mellon Bond Associates Gartmore Group Federated Investors Mellon Equity Associates Delaware Investment Advisers Rittenhouse Financial Services Aronson & Partners Rorer Asset Mgmt. Turner Investment Partners, Inc. Chartwell Investment Partners Geewax, Terker, & Co. MDL Capital Wellington Management Company 1838 Investment Advisors McGlinn Capital Mgmt. Inc. Valley Forge Asset Management C.S. McKee & Co. Inc. Schneider Capital Cooke & Bieler, Inc.

Source: Money Management Directory, 2003.

Table 2a:
1983 Rank
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Percentage of Total Tax-Exempt Assets and Percentage of Total Firms with Tax-Exempt Assets Under Management in the Top 20 States, 1983.
$ in State
New York Massachusetts California Illinois Connecticut Texas Pennsylvania Maryland Minnesota Georgia New Jersey Washington Oregon Wisconsin Florida Ohio Virginia Missouri Kentucky Colorado Others (10 states) Total (30 states)

# of Firms
154 50 77 27 19 18 27 10 8 13 14 6 4 8 8 19 9 9 2 12 38 532

Millions*
139,654 77,343 31,871 30,549 26,312 26,163 13,569 13,336 7,663 6,627 5,552 5,175 3,733 3,616 2,820 2,730 2,288 2,258 1,986 1,432 6,663 411,339

% of Total Assets
33.95 18.80 7.75 7.43 6.40 6.36 3.30 3.24 1.86 1.61 1.35 1.26 0.91 0.88 0.69 0.66 0.56 0.55 0.48 0.35 1.62 100.00

% of Total Firms
28.95 9.40 14.47 5.08 3.57 3.38 5.08 1.88 1.50 2.44 2.63 1.13 0.75 1.50 1.50 3.57 1.69 1.69 0.38 2.26 7.14 100.00

*1983 Assets reported in constant 2003 dollars. Source: Money Market Directory, 1983.

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Table 2b:
2003 Rank 1 2 3 4 5 6 7 8 9 10 12 13 14 15 16 17 18 19 20

Percentage of Total Tax-Exempt Assets and Percentage of Total Firms with Tax-Exempt Assets Under Management in the Top 20 States, 2003.
$ in State California Massachusetts New York Pennsylvania Illinois New Jersey Connecticut Georgia Ohio Minnesota Maryland Colorado Missouri North Carolina Virginia Florida Wisconsin Michigan Tennessee Others (26 states) Total (46 states) Millions 1,880,253 1,766,633 1,616,884 524,131 359,823 298,585 258,329 222,970 180,442 129,639 92,368 81,592 60,377 52,470 44,062 43,676 28,332 21,149 20,271 133,070 7,936,568 # of Firms 138 74 163 51 57 26 42 20 24 25 25 21 12 13 27 19 20 14 12 87 897 % of Total Assets 23.69 22.26 20.37 6.60 4.53 3.76 3.25 2.81 2.27 1.63 1.16 1.03 0.76 0.66 0.56 0.55 0.36 0.27 0.26 1.68 100.00 % of Total Firms 15.38 8.25 18.17 5.69 6.35 2.90 4.68 2.23 2.68 2.79 2.79 2.34 1.34 1.45 3.01 2.12 2.23 1.56 1.34 9.70 100.00

Source: Money Market Directory, 2003.

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Table 3a:
1983 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Percentage of Total Tax-Exempt Assets and Percentage of Total Firms with Tax-Exempt Assets Under Management in the Top 20 MSAs, 1983.
in Metro Area New York Boston Chicago $ # of % of % Total Total Firms 28.20 9.21 5.08 5.64 6.58 2.26 1.50 3.76 1.13 1.50 2.44 1.50 0.94 1.32 0.94 0.75 0.94 1.13 1.13 0.38 76.32 of

State Millions* Firms Assets NY MA IL 139,155 77,307 30,549 26,680 17,424 13,463 13,134 11,730 11,400 7,663 6,627 5,489 5,167 3,880 3,741 3,733 3,398 3,235 2,333 1,986 150 49 27 30 35 12 8 20 6 8 13 8 5 7 5 4 5 6 6 2 406 33.83 18.79 7.43 6.49 4.24 3.27 3.19 2.85 2.77 1.86 1.61 1.33 1.26 0.94 0.91 0.91 0.83 0.79 0.57 0.48 94.35

San Francisco CA Los Angeles-Long Beach CA Houston Baltimore Philadelphia Stamford-Norwalk Minneapolis-St. Paul Atlanta Hartford Seattle-BellevueEverett Anaheim-Santa Ana Newark Portland Bridgeport TX MD PA CT MN GA CT WA CA NJ OR CT

Milwaukee-Waukesha WI Kansas City Louisville MO KY

Total 388,094 *1983 Assets reported in constant 2003 dollars.

Source: Money Market Directory, 1983.

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Table 3b:

Percentage of Total Tax-Exempt Assets and Percentage of Total Firms with Tax-Exempt Assets Under Management in the Top 20 MSAs, 2003.
$ in Metro Area New York Boston San Francisco-Oakland Los Angeles-Long Beach Philadelphia Chicago Atlanta Stamford-Norwalk Anaheim-Santa Ana Minneapolis-St. Paul Pittsburgh Columbus Denver-Boulder Baltimore Houston Cleveland Kansas City San Diego Fort Lauderdale -Hollywood Dallas-Fort Worth Total State NY MA CA CA PA IL GA CT CA MN PA OH CO MD TX OH MO CA FL TX Millions 1,915,469 1,763,501 1,072,379 475,671 400,262 369,711 222,508 215,777 141,375 128,075 119,604 112,863 90,151 83,794 58,155 50,680 44,237 43,116 40,386 35,440 7,383,154 # of Firms 179 74 58 42 33 50 15 29 9 20 12 2 18 18 15 5 3 12 2 9 605 % of Total Assets 25.79 23.75 14.44 6.41 5.39 4.98 3.00 2.91 1.90 1.72 1.61 1.52 1.21 1.13 0.78 0.68 0.60 0.58 0.54 0.48 93.03 % of Total Firms 15.16 6.27 4.91 3.56 2.79 4.23 1.27 2.46 0.79 1.69 1.02 0.17 1.52 1.52 1.27 0.42 0.22 1.02 0.17 0.76 67.44

2003 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Source: Money Market Directory, 2003.

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Conshohocken with nearly $40 billion under management, and not far behind Philadelphia is Radnor (5th ) with $12 billion (Table 5). Overall, the top five cities in Pennsylvania (Figure 3b; Table 5) were home to 22 firms with $13.3 billion in taxexempt assets under management (reported in constant 2003 dollars), representing over 98 percent of the total tax-exempt assets under management in 1983. By 2003, the top five cities were home to 24 firms with $494.9 billion in tax-exempt assets under management. However, this absolute increase represented a decrease in total share from over 98 percent in 1983 to 94 percent in 2003, especially for Philadelphia which saw its share of total tax-exempt assets under management decrease from 65.7 percent in 1983 to 6.1 percent in 2003 (Figure 5), a dramatic decline. Bodenman (1998) reports on the initial stages of this decline in an earlier study of investment advisory firm

location within the Philadelphia MSA, 1983-1993. Perhaps equally dramatic and interesting, however, is the growing number of investment advisory firms located outside of the top five cities. In 1983, 81.5 percent of the firms with taxexempt assets under management in Pennsylvania were located in the top five cities. By 2003, the top five cities share of total firms had dropped to 47 percent the vast majority of this growth again taking place at the expense of Philadelphia. However, most of the growth in new firms and their tax-exempt assets under management has taken place in cities that are part of the Philadelphia Metropolitan Area (Figures 4a and 4b). For example, a number of the cities experiencing growth in firms and assets, including Malvern (1st), Conshohocken (3rd), and Radnor (5th ), are "Main Line" suburbs of Philadelphia. Considered at

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Table 4a: Percentage of Total Tax-Exempt Assets and Percentage of Total Firms with Tax-Exempt Assets Under Management in the Top 20 Cities, 1983.
1983 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 City New York Boston Chicago San Francisco Los Angeles Baltimore Houston Stamford Philadelphia Minneapolis Atlanta Hartford Seattle Portland Chatham Newport Beach Milwaukee Beverly Hills White Plains Louisville Total *1983 Assets reported in constant 2003 dollars.
Source: Money Market Directory, 1983.

$ in State NY MA IL CA CA MD TX CT PA MN GA CT WA OR NJ CA WI CA NY KY Millions* 136,599 77,267 28,949 24,634 16,085 13,134 12,043 9,448 8,914 7,663 6,627 5,007 3,838 3,733 3,553 3,275 3,235 2,890 2,046 1,986 370,926

# of Firms 147 46 25 18 24 8 12 1 14 8 13 4 3 4 2 4 6 5 1 2 347

% of Total Assets 33.21 18.78 7.04 5.99 3.91 3.19 2.93 2.30 2.17 1.86 1.61 1.22 0.93 0.91 0.86 0.80 0.79 0.70 0.50 0.48 90.18

% of Total Firms 27.63 8.65 4.70 3.38 4.51 1.50 2.26 0.19 2.63 1.50 2.44 0.75 0.56 0.75 0.38 0.75 1.13 0.94 0.19 0.38 65.23

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Table 4b:

Percentage of Total Tax-Exempt Assets and Percentage of Total Firms with Tax-Exempt Assets Under Management in the Top 20 Cities, 2003. $ in Millions 1,705,525 1,531,267 951,378 400,971 349,797 291,196 254,054 231,695 222,508 119,534 117,072 112,863 111,182 89,565 83,794 75,269 58,155 57,976 49,680 47,381 6,860,862 # of Firms 60 136 33 26 41 2 1 7 15 11 19 1 8 6 18 16 13 6 2 5 426 % of Total Assets 0.02 0.02 0.01 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 88.34 % of Total Firms 5.08 15.16 2.79 2.20 3.47 0.17 0.08 0.59 1.27 0.93 1.61 0.08 0.68 0.51 1.52 1.35 1.10 0.51 0.17 0.42 39.72

2003 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

City Boston New York San Francisco Los Angeles Chicago Malvern Plainsboro Newport Beach Atlanta Pittsburgh Minneapolis Columbus Pasadena Stamford Baltimore Denver Houston Cambridge Purchase Westport Total

State MA NY CA CA IL PA NJ CA GA PA MN OH CA CT MD CO TX MA NY CT

Source: Money Market Directory, 2003.

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The Industrial Geographer Table 5: Percentage of State's Total Assets and Percentage of State's Total Firms with Tax-Exempt Assets Under Management in Pennsylvania's Top Five Cities, 1983 and 2003. 1983 Rank 1 2 3 4 5 City Philadelphia Bala Cynwyd Valley Forge Reading Pittsburgh Total 2003 Rank 1 2 3 4 5 City Malvern Pittsburgh Conshohocken Philadelphia Radnor Total State PA PA PA PA PA State PA PA PA PA PA $ in Millions* 8,914 1,488 1,125 984 844 13,355 $ in Millions 291,196 119,534 39,758 31,991 12,414 494,893 # of Firms 14 1 1 3 3 22 # of Firms 2 11 1 7 3 24 Firm Average 637 1,488 1,125 328 281 607 Firm Average 145,598 10,867 39,758 4,570 4,138 20,621 % of Total Assets 65.70 10.97 8.29 7.25 6.22 98.43 % of Total Assets 55.56 22.81 7.59 6.10 2.37 94.42 % of Total Firms 51.85 3.70 3.70 11.11 11.11 81.48 % of Total Firms 3.92 21.57 1.96 13.73 5.88 47.06

*1983 Assets reported in constant 2003 dollars. Source: Money Market Directory, 1983 and 2003.

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Figure 5:
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Percentage of Total Tax-Exempt Assets Under Management in Pennsylvania's Top Five Cities, 1983 and 2003.

60

50

40

30

20

10

0 Philadelphia Pittsburgh Malvern Radnor Conshohocken

City
City's Percent of Total Assets, 1983 City's Percent of Total Assets, 2003

Source: Money Market Directory, 1983; 2003.

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the metropolitan scale, therefore, dispersal of assets under management more accurately suggests "suburbanization." That is, most of the growth is in cities located in the Philadelphia Metropolitan Area. This finding supports the initial trends reported by Bodenman (1998; 2002) in earlier studies of the industrys locational dynamics. SUMMARY AND CONCLUSIONS Overall, the analysis of data at the intermetropolitan level indicates that within the state of Pennsylvania (ranked 4th in tax-exempt assets under management in 2003): both Metropolitan Philadelphia and Pittsburgh increased their relative shares of assets and firms during the 1983-2003 study period. By 2003, the Philadelphia MSA had moved ahead of Chicago (ranked 5th overall), and the Pittsburgh MSA moved into the top 20 nationally (ranked 11th overall). However, analysis of the intrametropolitan growth and change of the investment advisory industry in Pennsylvania indicates that the industry's ties to the CBD of the traditional financial center, Philadelphia, continue to break down. The city of Philadelphia's share of Pennsylvania's total assets and total firms had declined to 6.1 percent and 13.7 percent, respectively, by 2003. However, the majority of cities that experienced the tremendous growth in firms and assets, were located in the Philadelphia metropolitan area. Thus, the analysis of intrametropolitan growth and change, suggests that (1) investment management ties to the CBD of the traditional financial center continue to weaken, but that (2) spatial proximity to the traditional financial center is being maintained. The analysis, therefore, suggests significant suburbanization of

the investment advisory industry Philadelphia from 1983 to 2003.

in

At both the inter- and intrametropolitan level, the industry's spatial dynamics in Pennsylvania indicate deconcentration and dispersal as the information economy continues to mature. The concentrated dispersal of the industry over the 1983-2003 study period further indicates that location in a central city (i.e., Philadelphia CBD) is no longer a necessary condition. However, the extent to which suburbanization of the investment advisory industry is occurring elsewhere, in other MSAs (i.e., New York) is unclearan indication that additional industry location studies are needed. REFERENCES
Bloomfield, B. P., Coombs, R., Knights, D., and D. Littler (eds). 2000. Information Technology and Organizations: Strategies, Networks, and Integration. New York: Oxford University Press. Bodenman, J. E. 1998. "The Suburbanization of the Institutional Investment Advisory Industry: Metropolitan Philadelphia, 1983-1993." Professional Geographer 50(1): 112-126. Bodenman, J. E. 2000. "Firm Characteristics and Location: The Case of the Institutional Investment Advisory Industry in the United States, 19831996." Papers in Regional Science 79(1): 33-56. Bodenman, J. E. 2002. The Spatial Dynamics of Pennsylvanias Institutional Investment Advisory Industry: Pittsburgh vs. Philadelphia, 1983-2000. The Pennsylvania Geographer XL(1): 3-34. Borchert, J.R. 1978. "Major Control Points in American Economic Geography." Annals of the Association of Economic Geographers 68: 214-232. Carlino, G. A. 2001. "Knowledge Spillovers: Cities Role in the New Economy." Business Review: Federal Reserve Bank of Philadelphia Q4: 17-23. Castells, M. 1989. The Informational City: Information Technology, Economic Restructuring, and Urban-Regional Process. Cambridge, MA: Basil Blackwell. Clark, G. L. 2000. Pension Fund Capitalism. New York: Oxford University Press. Daniels, P.W. 1993. Service Industries in the World Economy. Cambridge, MA: Basil Blackwell.

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The Industrial Geographer Graves, W. 1998. The Geography of Mutual Fund Assets. Professional Geographer 50(2): 243254. Green, M.B. 1993. "A Geography of Institutional Stock Ownership in the United States." Annals of the Association of American Geographers 83(1): 66-89. Hepworth, M.E. 1990. Geography of the Information Economy. New York, NY: The Guilford Press. Hepworth, M.E. 1991. Information Technology and the Global Restructuring of Capital Markets. In Collapsing Space and Time, ed. S.D. Brunn and T.R. Leinbach, pp. 132-148. London: Harper Collins Academic. Lee, R. 2000. What is an Exchange?: The Automation, Management, and Regulation of Financial Markets. New York: Oxford University Press. Money Market Directories. 1983. Money Market Directory of Pension Funds and Their Investment Managers. New York, NY: McGraw-Hill Publishers. Money Market Directories. 2003. Standard & Poors: The Money Market Directory of Pension Funds and Their Investment Managers. New York, NY: McGraw-Hill Co. Sassen, S. 1991. The Global City: New York, London, Tokyo. Princeton, NJ: Princeton University Press. Stanback, T. M. 1991. The New Suburbanization: Challenge to the Central City. Boulder, CO: Westview Press.

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